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Signs & Portents for 2004
December 2003

The Economy

• 2004 should be a year of swelling growth and prosperity – if we can avoid some really nasty land mines along the way. The year 2004 will be one of steadily improving economic results. Job growth will continue, profits will rise, and people will generally start feeling better about themselves and the future. Canada’s recovery will be solid and steady, but necessarily hooked to what happens in the States. Their recovery will be slowed by the massive amount of consumer, corporate, and government debt. Despite this, things will be looking up. In fact, I suspect that the most likely scenario for 2004 is that we will muddle through, stocks will be up an average of about 9%, and we will end the year on an optimistic note. And since currency markets tend to overshoot, the Euro and the Canadian loonie will continue to climb against the US dollar for most of the year. But none of this is guaranteed, and you need to keep an eye on several land mines, some of which are pretty threatening.

• The biggest story (and biggest land mine) of 2004 may also be the most boring. The global trading system is under attack from all sides by protectionists, and may degenerate into a trade war. Such a war would be a disaster, potentially plunging us into a repeat of the Great Depression of the 1930s, and aborting the economic recovery established in North America and starting in Asia and Europe. Protectionist sentiments are rising everywhere, but especially in the U.S., where President Bush has almost precipitated a trade war in the service of short-sighted politics. Yet all of his potential Democrat opponents are worse.

Meanwhile, the U.S. is on the wrong side of several trade issues, including a $4 billion dispute with the EU revolving around tax breaks for U.S. exporters. The EU, which has been patient on this, is now signalling that they’re going to apply punitive duties on American goods as early as January, which will cause American politicians to go ballistic. Corporate recipients of the illegal tax largess and their tame Congress-critters are making noises about “not letting Europeans dictate American policy” and retaliating to the retaliation – which is how trade wars start. Fight the boredom inherent in this dry issue: if a trade war happens from too many elected officials playing “Chicken” too aggressively, this will be the story of the year, and it won’t be pretty.

• China and India will become even higher profile targets for trade protectionists as low-, medium-, and high-skilled manufacturing and service jobs migrate there from North America. If there are two software analysts with comparable skills, but one is paid anywhere from five to ten times as much as the other, which one would you hire? Increasingly, North American (and European) companies are hiring the best and most cost-effective people, often in China or India, which allows them to cut the costs of their products and services. In aggregate this increasing the standard of living of consumers throughout North America, but the cost is those people here who lose their jobs. This is going to get more headlines as the trend accelerates in 2004, even as new jobs are created here that offer better pay and better working conditions – but typically for people with different skill-sets than those thrown out of work. Meanwhile, both India and China are becoming important importers of products and services we produce. The net result is that everyone (in aggregate) winds up better off. But that’s not what gets the headlines, so look for lots of screaming about the need to protect jobs from being 'stolen' by China and India.

Geopolitics

• The U.S. Supreme Court is due to render a judgment of global importance in 2004: they’ll decide if America will cease to be a representative democracy or not. Unfortunately, this is another yawn-inspiring technical issue, which is why it’s getting so little attention.

Every 10 years, the boundaries of U.S. federal and state electoral districts are redrawn, based on new census data. In recent years, though, computers have allowed politicians of both parties to collude in redrawing the boundaries of electoral districts with great precision to ensure the re-election of the incumbents. The result is that all the Democratic voters are loaded up in one set of districts, and all the Republicans are piled into the others – a practice called “gerrymandering,” a practice with a long, dishonourable history. Now, though, it’s being done with such precision that almost all of the seats in the U.S. House of Representatives are now “safe” seats. In the 2002 elections, only four incumbents out of 435 Representatives were defeated. That’s less than 1% – an electoral record that would make Communist North Korea proud, but is a revolting perversion of democracy in a supposedly free society. And the same thing is happening at the state government level.

If the Supreme Court rules to allow this, then U.S. politics continues its trend towards becoming less representative, and more extreme. A Republican, for instance, in a safe district can’t be defeated by a Democrat, but can lose a primary battle within her own party. Hence, she is forced to move away from the moderate centre and towards the extreme right wing. The same is true for a Democrat being forced toward the extreme left wing. This means that American foreign and trade policy will be determined by politicians who are not representative of Americans generally, but of the more extreme members of each party.

And, with the current even split between the Republicans and Democrats, those few seats that are truly contested take on importance well beyond their size. Hence, the local agricultural concerns or religious prejudices of East Podunk, Iowa, for instance, can wind up dictating American military or trade policy at the expense of both the vast majority of American voters, and to the detriment of America’s allies and trading partners.

• By comparison, unless Paul Martin steps on his crank with football cleats, Canadian federal politics in 2004 will be one long yawn towards a coronation of the “renewed” federal liberals. Under the circumstances, that doesn’t seem like a bad thing – except I really prefer living in country with a government that has more than one electable party.

Health Care

• One of the most interesting breakthroughs you’ll hear about in 2004 – to patients and governments alike – is the emergence of “predictive medicine.” As we learn more and more about molecular biology, genetics, and proteomics (the study of proteins), we’re starting to be able identify diseases long before symptoms emerge, say by the presence of specific proteins in the blood stream. This will allow doctors to catch things like pancreatic or ovarian cancer, which typically go undetected until they’re about to kill the patient. With early discovery, these may be as easy to cure as other cancers, dramatically increasing survival rates. It looks as if we will eventually be able to perform a simple blood test and identify the specific kind of cancer someone has, determine how aggressive it is, and therefore decide how aggressively it needs to be treated. Today, doctors almost automatically use aggressive and expensive therapies because they don’t want to risk the life of the patient. Ultimately, though, when a woman is diagnosed with breast cancer, a US$1500 diagnostic will determine whether expensive chemotherapy drugs that cost US$4500 or more must be used to combat an aggressive variety of cancer, or if less expensive therapies will work without risking the health of the patient. Hence predictive medicine will lead to earlier diagnoses, higher survival rates, and lower costs.

• While we’re on the subject of cancers, you’re going to start hearing the term “cancer vaccines” in 2004. Unlike vaccines used to prevent viral diseases like smallpox or measles, cancer vaccines will be administered to people who have already have cancer. Cancer cells mutate from the body’s own cells and spoof the immune system so they are not attacked. Cancer vaccines will stimulate the immune system to attack the cancerous cells, letting the body eliminate the cancer, cell by cell, instead of requiring costly drugs with harmful side effects. Several of these vaccines are already in human clinical trials, including those for kidney cancer, melanoma, lung cancer, pancreatic cancer, and leukemia. A vaccine for prostate cancer is closest to market, being scheduled to finish clinical trials in 2004. This would mean it would hit the market within three- to five years.

• In the field of bionics – using mechanical and electronic devices to assist humans overcome handicaps – we’re seeing some significant breakthroughs that are going to start percolating into the market. Wearable computers, like those made by Xybernaut of Fairfax, Virginia, were originally thought to be of greatest use in industrial and commercial settings. Now, though, they are being used to assist handicapped kids with their schooling. Quadriplegics will increasingly be able to use computers programmed to read their brain waves to manipulate robot arms, giving them arms, legs, voices, and the ability to use the Internet. Bionic legs and arms that replace and work very much like normal limbs, will become easier to use, more widespread, and look and act more naturally as the computers and software that interpret nerve impulse and execute commands become more sophisticated. Bionic eyes and ears will continue to improve, with cameras and microphones being hooked up to the nervous system allowing blind people to see in a rudimentary way, and the deaf to hear. Synthetic skin is emerging to treat people with severe burns. And bionics won’t just be for the handicapped – normally able people will start using them, too. Experimental exo-skeletons are being developed to assist nurses, for instance, to lift and move patients, and soldiers to run faster and carry more gear in the field.

Technology

• Another branch of biosciences, industrial biotech, is going to gradually replace petroleum-based plastics, pesticides, and gasoline with naturally grown substitutes. There are already experimental plants that produce the polymers from which many plastics and synthetic materials are made, but without the need for petroleum feedstock. Food plants are having specific genes turned on full-time so that the chemicals such plants naturally but sporadically produce to fight off weeds and insects are produced all the time, reducing the need for pesticides, and without environmental damage. And ethanol, a form of alcohol derived from plants that can be used as fuel in today’s cars without significant modifications, can now be produced at a price that may be cheaper than gasoline. Bioengineered enzymes take straw or waste wood and convert it into ethanol thousands of times faster than earlier techniques, dropping the price. This means that our cars can stop spewing carbon dioxide into the atmosphere, because any carbon produced by burning ethanol has been taken out of the atmosphere in the first place, and hence is merely being recycled.

• HDTV – High Definition Television – has been the technology of the future for the last 20 years, but has never made it to prime time. It’s time has now come, and 2004 will see HDTV as the Next Big Thing in consumer electronics. This is happening because three different technologies are coming together to produce an end result for which the customer will finally pay. Whereas HDTV efforts in the past have produced picture improvements that are pretty but not compelling, now the combination of HDTVs, plus large-sized flat-screens, and digital signals from digital broadcasts and DVDs are producing images of a quality that is as breathtakingly different from standard televisions as colour is from black-and-white. So it’s show-time for HDTV at last.

• Computers are a commodity now, which means their importance is being overlooked. Computers are now thrown into a problem wherever computational power can be useful. I know one small company that employs fewer than 10 people, yet is able to do cutting edge pharmaceutical research because they own and use more computing power than existed on Earth 30 years ago. This kind of enormous computing power is the engine that is driving many biomedical breakthroughs, including the ones I described earlier, and is going to produce equally startling breakthroughs in other areas. Included in this list are new materials that are dramatically lighter and dramatically stronger than steel; materials that will make it possible to build an elevator into outer space, which has been discussed for decades but is now coming within our grasp; practical high temperature superconductors, which will revolutionize the generation, storage, and transmission of electricity; and the modelling of weather and climate, including much improved forecasts of the paths of hurricanes, and the effects of global warming. And don’t forget that computers and communications produced the Internet, and steadily increasing power and bandwidth are going to continue to push breakthroughs in e-commerce, i-commerce, business-to-business transactions, and the use and usefulness of intranets. We now take computers for granted, but what we’ve seen so far is merely the thin edge of the wedge. Not only is the pace of change accelerating, but the rate of acceleration is increasing – and the changes produced by accelerating computing power will proliferate.

• And speaking of the Internet, the Net has already transformed the 2004 American presidential election – and potentially all future elections wherever the Net is widely available – as much as the emergence of national television, especially the Nixon-Kennedy Debates, did in the 1960s. Howard Dean is the frontrunner for the Democrats. But how has the governor of a small, New England state, who is fundamentally unknown elsewhere, managed to raise more money and build a more effective grassroots campaign network than any other politician except George Bush? The answer is that early on he attracted some of the propeller heads from failed dot.com companies, and they created a distributed network of supporters and fund-raisers completely unlike the typical command-and-control campaign organizations of earlier eras. Anyone interested in Dean anywhere in the U.S. could download instructions on how to build a local campaign network or create a media event. Anyone who wanted to donate money could do so immediately and could find materials to encourage others to donate. The result was a network that built itself from the bottom-up, rather than being force-fed from the top down by ward-heeling pros. It has been so successful that Dean has opted out of federal funding because it would limit how much he could spend against George Bush next Fall. Whether Dean captures the Democratic nomination or defeats Bush or not, his campaign has transformed American elections forever – and possibly those of all advanced democracies as well. Net power has become political power.

by futurist Richard Worzel

© Copyright, IF Research, December, 2003.

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